Houston v. Nowland

Stephen, Judge, delivered the opinion of the court. The question to be decided in this case, arises upon a case stated, and must be determined according to the construction and legal efficacy of the deed referred to, by the litigating parties. By that deed, Wilson the absent debtor, contemplated a transfer of all his property of every description, to certain trustees therein mentioned, for the benefit of all his creditors. That such a deed is available in this State, as being founded upon a good and valuable consideration, has been solemnly settled by a very recent adjudication of this court, in the case of the State of Maryland vs. the Bank of Maryland, 6 Gill and Johns. 205. In that case the Chief Justice in delivering the opinion of the court, expresses himself in the following emphatic terms; “ it has been more than once decided by this court, that a debtor in failing circumstances, may prefer one creditor to another, by a transfer of his property made in good faith, and if according to circumstances, one creditor may be preferred to another, it would be difficult to imagine an objection to the validity of a transfer by a debtor, of his whole estate to trustees, for the equal benefit of all his creditors. Equality is equity, and when a debtor makes a transfer of his property, for the fair purpose of equal distribution among his creditors, he does an [492] honest act, and discharges a moral duty, which none can reasonably complain of, and to which, objection can seldom be made, except by such as may seek to secure their own claims at the expense of the other creditors; ” so in 4th Johns. C. Rep. 529, Chancellor Kent, maintaining the same doctrine, says ; “ it is settled by a series of cases referred to, in Hendricks vs. Robinson, 2 John. C. Rep. 307, 308, and to which may be added the case of Pickstock vs. Lyster, 3 Maul and Selw. 371, and Brown vs. Minturn, 2 Gallison. 557, that an insolvent debtor may at any time, before his property becomes bound by any lien, assign it over to trustees for the benefit of all his creditors, by an act made bona fide. The assignment is to be referred to an act of duty, attached to his character of debtor to make the fund available, Tor the whole body of the creditors.” In the case last cited, it was held, that the assignment was good against a subsequent attachment, if the creditors had assented to the assignment prior to the attachment, and the inclination of the learned judge seemed to be in favour of the validity of the assignment, even without such intervening assent, and which I apprehend is not indispensable. If the assignment was directly to the creditors, their assent would be necessary to give validity in law to the deed. But if the assignment as in this case, be to trustees for their use, the legal estate passes and vests in the trustees, and Chancery will compel the execution of the trust, for the benefit of the creditors, though they be not at the time assenting, and parties to the conveyance. The case of Marbury and Brooks, reported in 7th Wheaton, 556, is also an authority to shew, that the assent of the creditors is not necessary to legalize, and give efficacy to the assignment. This court speaking of that case in 6 Gill and Johns. 219, say, Marbury vs. Brooks, and Brooks vs. Marbury, was a case of attachment, sued out by Brooks a creditor, against the lands, tenements, goods, chattels and credits of Fitzhugh an absconding debtor, and laid in the hands of Marbury, who claimed and held the property under a deed of assignment to him by Fitzhugh, of all his [493] estate, executed before the attachment was issued, for the particular benefit of certain preferred creditors, several banks in the District of Columbia; and the question was, whether the deed so given to Marbury, was valid and effectual to pass the property from Fitzhugh the debtor, to Marbury the trustee, who was not a creditor of Fitzhugh ; and it was held that it was, and that it vested, ab initio, the legal estate in the trustee, although the banks for whose particular benefit it was made, had not expressed their assent to it, and were in fact, ignorant of its execution at the time it was given. It is true, the deed of Wilson to his trustee, did not operate to transfer his real estate in Maryland, it not being executed, acknowledged, and recorded according to our laws ; but the case stated, upon which the judgment of the court below was rendered, shews that the land upon which the attachment was laid in this case, had been previously sold by Wilson, to a certain George Ford, that he was in the possession of it, that Wilson had given him a bond, to convey the legal title on the payment of the purchase money, that a part had been paid, and the balance which was due, was payable in virtue of the assignment, not to Wilson, but to his trustees, for the benefit of his creditors. Under these circumstances, Wilson had no interest in the land attached, except the dry legal title, which he held in trust for Ford, or his legal representatives, and which he was bound to convey to them, so soon as the balance of the purchase money should be paid to his trustees, for the benefit of his creditors. Such an interest not being a beneficial one, we do not think a fit subject matter for the operation of an attachment, and that the opinion of the court below, was in that respect correct. We think that the judgment of the court below was also correct, so far as the same relates to the operation of the assignment upon the choses in action, attached in this case. Such assignment operated to transfer them to the trustee, at least in equity, and left as in the case of the land, nothing but a dry legal title in the assignor, which being scarcely any thing more than a mere scintilla juris, was not the subject of an attachment, 5 [494] Cranch, 300, 1st Atkins, 162. Upon the whole, we think the judgment of the court below was correct, and ought to be affirmed. JUDGMENT AFFIRMED.